In a classic “good news, bad news” report, Willis Towers Watson finds that commercial insurance prices continued to moderate for the fourth quarter of 2015, but haven’t reached negative numbers, which is good news for businesses.
But here's the bad news for insurers during the same time period: Aggregate prices increased by less than 1%, according to the London-based risk management, insurance brokerage and financial advisory company's latest Commercial Lines Pricing Survey.
The survey compared prices charged on policies underwritten during the fourth quarter of 2015 to those charged for the same coverage during the same quarter of 2014. Willis Towers Watson found that the price changes reported by carriers continue a trend of moderation in increases that began in the first quarter of 2013.
Consistent with the results for the third quarter of 2015, Workers' Compensation, Commercial Property, and Directors and Officers Liability reported modest price decreases. Commercial Auto showed the largest price increases, the survey found, with changes for most other lines falling in the low single digits. Price increases were nearly flat for large accounts and mid-market accounts, while small commercial account data indicated modest but continued increases. For specialty accounts, the survey found that prices turned slightly negative for the first time since 4Q 2011.
The survey "suggests a market still in positive territory as to pricing, but the story is very different by line. For example, we see another quarter of price increases for commercial auto liability — fueled by deterioration in claim costs — while director and officer price decreases, which started a year ago, continue to accelerate as the market competes for the best-performing segments,” said Alejandra Nolibos, director in Willis Towers Watson’s Americas Property & Casualty Insurance practice. “This means a conclusion on pricing for the overall market is hard to interpret, but carriers continue to report modest claim cost inflation for most lines surveyed, which is keeping loss ratio movements in check.”
Source: Willis Towers Watson
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